Adding pictures to your blog starts with clicking “Upload File” in the left navigation bar. You can do this from the main screen of your blog, or while typing an entry.
When you click “Upload File” you receive this pop-up:

Enter the path to your photo next to “file:” or click “Browse” to find your photo on your computer. After you’ve entered this information, click “Upload”
You will be asked in the screen below whether you want to create a new entry with this photo or whether you want to see the HTML. If you clicked “Upload File” above, while typing an entry, click “Show me the HTML.” If you clicked “Upload File” and weren’t within an entry, click “Create a new entry using this upload file.” You have one other things to consider, how you want your picture to display. If you click “Popup Image” then the image will not appear in your blog entry, a link will appear that the user can click in order to see the image. If you click “Embedded Image” then the image will appear within your entry.

In the above situation, I clicked “Create a new entry …” and “Embedded Image” to receive this result:

You see a blank entry (i.e., no title, no category, etc.), with the IMG tags in the entry box. That is the command that will display your picture within your entry. Type your text above or below the IMG – wherever you want the text to appear in relation to your picture.
Note: the “alt=” command, defaults to your file name, but this is the text that appears when your reader runs a cursor over the picture or when the picture does not load. You can change what is in the quotations to something more meaningful if you like.
If I had clicked, “Show me the HTML” and Embedded Image, I would have received the popup below. I would have to highlight and copy the text in that window into my existing entry.

Note: you cannot upload the same file more than once. You will receive this funky error message: “Error creating temporary file; please check your TempDir setting in mt.cfg (currently '/tmp') this location should be writable.”
I think that's it. Let's see how long it takes Pauline or Marta to tell me there is an easier way. :D.
